Concern that taxpayers' cash for project will conflict with £2m JP Morgan contract

Ex-PM's organisation has already passed first hurdle to get money

Award of grant would enable him to conduct 'peace-building' in war-torn countries... such as Iraq

By Simon Walters and Glen Owen

Last updated at 12:07 AM on 13th November 2011

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Tony Blair is facing questions after one of his charities launched a bid to grab a slice of Britain's £8billion foreign aid budget.

His organisation has taken the first steps to become eligible for grants awarded by the Department for International Development to rebuild war-torn countries.

The highly sensitive move has prompted concerns over a possible conflict of interest with Mr Blair's complex business dealings.

Tony Blair is being made an honorary Paramount Chief in the village of Mahera in Sierra Leone. Of his estimated £7m-a-year earnings, about £2m comes from merchant bank JP Morgan, which has major interests in many of the countries receiving British aid

Of his estimated £7 million-a-year earnings, about £2 million comes from merchant bank JP Morgan, which has major interests in many of the countries receiving British aid.

Mr Blair's charity has applied to join the tendering process for the Department for International Development (DfID) 'security and governance' scheme, which undertakes 'peace-building' work in countries such as Iraq and Afghanistan.

The remit has raised eyebrows given the former Premier's disastrous decision to back the Iraq War.

Last night, Conservative MPs said Mr Blair must prove that the pitch would not conflict with his lucrative commercial activities.

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Tory Philip Davies said: 'This is a very sensitive issue. The Government will have to be scrupulously careful with the award of any contracts to Mr Blair to ensure there can be no possible conflict of interest with his widespread business dealings in the Third World.'

However, when asked about MPs' fears that the application could conflict with Mr Blair's business activities, a spokesman for the former Prime Minister said: 'On what basis do they claim there is a conflict? There is none, and to claim or imply otherwise is defamatory.'

Mr Blair has applied to be considered for grants via the Tony Blair Africa Governance Initiative.

Curiously, the application has been made in the name of the Tony Blair Governance Initiative, omitting the word Africa. Mr Blair's spokesman said the charity only operated in Africa.

Ex-PM Tony Blair talks with health workers at Rokupa Government Hospital in Freetown on a visit to Sierra Leone, where his charity and JP Morgan operate, last year

The charity is run from the same office in London's Grosvenor Square as his business empire, the Office of Tony Blair.

They share the same PO Box address in Paddington and are registered at the same address near St James's Park. The PO Box address is also shared by Cherie Blair's Foundation For Women charity.

DfID – the Whitehall department whose budget will rise to £11 billion by 2015 – is spending £787 million this year on 'governance and security' schemes.

Of this, £34 million is going to Afghanistan and £1.7 million to Iraq. Large sums also go to African and other Asian countries.

Individual contracts can be worth hundreds of thousands of pounds. It is believed that some are worth millions, although a DfID spokesman refused to confirm this.

A secret DfID document seen by The Mail on Sunday shows Mr Blair's name on the list of those who have applied for 'Lot A' of the DfID governance portfolio. If successful, his charity would then be on a list of organisations eligible to bid for contracts as they came up.

Others on the application list include the 'Big Four' accountancy giants – Ernst & Young, KPMG, Deloitte and PricewaterhouseCoopers – plus charities such as Save The Children and Christian Aid.Philip Davies MP warned Mr Blair is entering a very sensitive area of policy and the Government will have to be careful when awarding contracts

The document suggests that Mr Blair's record in Iraq and Afghanistan could be significant, as it states: 'Bidders should describe their approach to operating in conflict-affected and fragile states.'

A DfID guide says bidders must prove their expertise in public sector reform and be able to help with 'the effective functioning of the Cabinet and PM's/President's offices'.

That remit may raise eyebrows given that Mr Blair was criticised for his record on public service reform and the way he ran No 10, making key decisions with informal 'sofa diplomacy' sessions with his cronies, rather than the Cabinet system.

International Development Secretary Andrew Mitchell last night confirmed that Mr Blair had applied to be considered for DfID cash.

He said 'The Tony Blair Governance Initiative has applied . . . to be eligible to compete for a contract on public sector governance.

'Their bid will be treated like any other and judged on value for money and effectiveness. All DfID contracts operate under strict rules designed to get the best for British taxpayers and deliver help to the world's poorest people.'

Mr Blair has entered a three-stage tendering process in which he must show he is fit to run a major overseas aid project with public money.

If Mr Blair's bid is approved, he will then face separate 'mini competitions' for individual contracts.

His overall finances are shrouded in mystery, but it is understood that until now his charitable activities in the Third World have been funded mainly from his lucrative commercial activities. Adding Government money to this would represent a major expansion of his empire.

Mr Blair is thought to have made about £25 million since leaving office, but the opaque way his finances are structured makes it almost impossible to establish the true size of his fortune. It is known that his property portfolio contains seven homes, worth £14 million.

The Tony Blair Africa Governance Initiative (AGI) is part of the Byzantine structure of companies, partnerships and consultancies constructed by the former PM.

At the centre of the web is the Office of Tony Blair, based in Grosvenor Square, London, which co-ordinates all his activities.

Aid to Sierra Leone is at the centre of concerns over a potential conflict of interest for Mr Blair

The office is funded by a structure called Windrush Ventures, into which much of his estimated £7 million-a-year income is funnelled. This income is derived from his commercial consultancy, Tony Blair Associates, the JP Morgan consultancy, another job with the Swiss insurer Zurich Financial Services and speaking engagements that can earn him six-figure payments.

The AGI is registered as a charity, as is his Faith Foundation and Sports Foundation. However, last year the AGI was reprimanded by the Charities Commission for asking supporters to back Labour in the Election.

The former PM divides his time between the charities and his diplomatic role as Middle East peace envoy for the 'Quartet' of the UN, Russia, America and the EU.

Critics argue that much of his charitable work helps him to establish key political and commercial contacts around the world.

Nick Thompson, the chief operating officer of AGI, previously headed the climate change unit at the Department for Business.

Paul Skidmore, AGI's director of strategy and fundraising, is a former adviser to David Miliband; Andrew Ratcliffe, one of its project leaders, was in Mr Blair's Downing Street Strategy Unit, while Malte Gerhold, who is a project leader for AGI in Sierra Leone, worked in his Delivery Unit.

Sierra Leone illustrates how Mr Blair could be open to claims that his business and governmental links could lead to a conflict of interest.

The AGI is working to end the nation's dependence on aid, and has helped the government there to push through reforms, including fast-track commercial courts and easier financing from banks to small businesses.

Meanwhile, JP Morgan has business interests in the country, including a stake in mining company Titanium Resources Group.

DfID gave £45 million in aid in Sierra Leone in 2009/10, of which £18 million went on 'governance'.

However, Mr Blair's spokesman insisted: 'Mr Blair does not do business in any of the countries that AGI operates in.'

Mr Blair's AGI has come under fire from some quarters for advising Rwandan leader Paul Kagame, who has been accused of running a repressive regime. He has also advised Liberian President Ellen Johnson Sirleaf on how to copy his style of running a government with a 'strong centre'.

Mr Blair has already passed the first hurdle, which had the 51 applicants whittled down to 41. These will be reduced to 'about a dozen' who will be eligible to bid for future DfIF contracts.